The Stock Market eats out of Anjan Chatterjee's hands

Since its listing On May 30, the Speciality Restaurants Stock (NSE: SRL) has gone up by almost 50%

I've studied commerce at St. Xavier's College, Calcutta. Finance and research is where my calling is. I find it it fascinating. The strategies of companies, people behind them, the innovative ideas, political turmoil and the associated history is something which captivates me.

I met Anjan Chatterjee, founder and owner of Speciality Restaurants Ltd. on his home turf. Mainland China is his flagship chain with 32 outlets now. The meeting was a couple of weeks before his company’s IPO hit the market. Though the agenda for our meeting was not fund raising, the conversation veered to the IPO towards the end of our chat. I asked him how things were holding up, as it was almost a year since Speciality had filed their Draft Red Herring Prospectus (DRHP). Chatterjee pointed out to the weak market and said the wait would soon end. He seemed quite confident of being able to carry it off, even though many others were faltering.

Well, turns out his confidence was justified. Since its listing On May 30, the Speciality Restaurants Stock (NSE: SRL) has gone up by almost 50%. That’s a phenomenal rise in a falling market. This certainly is not the best time for IPOs as Tribhovandas Bhimji Zaveri, Mumbai's marquee jeweller found. Their IPO was barely subscribed and scraped through on the last day and trades below its listing price. Another company, Samvardhana Motherson, an auto component manufacturer, had to cancel its Rs 1,665 crore IPO because it failed to attract the requisite number of investors. For SRL to have done exceptionally well in such conditions, speaks volumes not just about the company, but also investor appetite for stocks that play on India's consumption space. Of course, no one has proved this as convincingly as Jubilant Foodworks, the owner of the Dominos Pizza franchise. In over two years that the stock has been listed, it has multiplied 7.5 times. It seems that SRL is headed the same way. Even though it was at one time the leading fine-dining restaurant chain in India, it has since relinquished its position to Blue Foods now the biggest fine-diner in the country. SRL, though, has a plethora of good brands like Mainland China, Sigree, Oh! Calcutta, Sweet Bengal, Machaan that can be scaled up to drive profitability in the future. “Every growth is possible, profitable growth is more important,” says Chatterjee. Well, you can't question that- the man has clearly proven his chops.

GOUTAM BASU

Dear Mr Anjan Chatterjee
I would like to draw your attention regarding your South city mall Branch. On 16.2.2014 myself and my family members ( Total 4 ) visited this branch for lunch . We have gone for buffet lunch.
It was most surprising that The quality and taste of food items have drastically gone down. We have spent almost Rs 3150/- for 4 persons. But we could not take full meal.
We are totally flabbergast to have experienced , the service . First of all your service people are not at all suitable for Mainland China. I think they are not at all trained. I feel they do not have experience to serve your customers.
In fact, we could not visualized that in Mainland China, The quality of the food will be so deteriorated. However , we will never visit your Restaurant for food in future. I will convey my experience to my friends at list 2000 people thru FB and other means.
Thanks
Goutam Basu

on Feb 17, 2014

augustus

Bharat,
Good work. Not all of us have access to critical company information. And you are providing it to us. Simply commendable.
This work (even at a high level) could get better if put forth issues like risks, the impact of inflation on their pricing, how the management is managing same, how do they plan to keep attracting customers in spite of competition for the wallet and not just from other restaurants etc.

on Jun 17, 2012

Bharat Bhagnani

I wanted to provide a broad view of the stock. You may've wanted more. So, here it is:
Even though now its no longer the largest, it still is the most profitable fine-dining chain. It had a net profit of Rs 11 crore on sales of Rs. 130 crore, And this is exactly what is important: the bottomline. the profits have gone up from Rs. 3.1 crore at the end of 2007 to what they're now.
Not just that its free cash flow from operations has gone up more than 4 times in the last 4 years, now stands at about Rs. 28 crore. Its debt level hasn't changed much, it had Rs. 44 crore of debt, which has gone down considerably after the IPO.
Moreover, it has an ROE(return on Equity), which I consider an extremely important measure, of 15.56% which has grown from 11.69% and 8.89% in the years before that.
Its a direct play on the India growth story, which has fascinated investors for much of the last decade. and this consumption doesnt just include food & beverage. Page Industries(Jockey innerwear), Bata shoes, Gitanjali Gems, La opala crockery, HSIL (sanitaryware) are all consumer facing businesses that have been heralded as champions of the stock market. Speciality group seems headed for the same.
Would be great to hear your views.

on Jun 16, 2012

harry

what a strange article! please go a little more indepth.
amateurish

on Jun 15, 2012

Bharat Bhagnani

Thank you for the comment. I simply wanted to give a broad view of the movement of the stock and not exactly delve into in-depth analysis. what details were you looking for?

on Jun 16, 2012

Insta-Subscribe to Forbes India Magazine

For hassle free instant subscription, just give your number and email id and our customer care agent will get in touch with you